Previously, Spread Trading was thought of as an exclusive activity for high-flying City of London types. However, it has become more accessible to everyone lately and is now used to speculate on stocks and shares, currencies, and even football games.
Punters seeking an advantage over the bookies are increasingly turning to Spread Betting. But what is it, and how does it work? Spread Betting is an agreement between two parties to exchange the difference between the opening price and closing price.
The main attraction for punters is that profits are potentially much larger than with conventional betting. However, the losses can also be much bigger, so it is important to understand how Spread Betting works before getting involved.
WHAT IS A SPREAD BET?
Spread betting is a form of wagering which requires you to bet on the direction in which the market moves rather than its ultimate outcome.
Unlike traditional sports betting, where a stake is placed on the result of an event with odds established by a bookmaker. Spread betting involves predicting whether final outcome will exceed or fall below the spread – meaning wagers are based on ranges instead of single outcomes.
The aim is to determine whether the actual outcome will be higher or lower than the spread established by the bookmaker.
Each bookie will establish its own spread. A punter can improve his or her odds by finding the published spread that is most favorable based on his or her prediction.
EXAMPLE FOOTBALL SPREAD BET
In the sports betting world, a ‘spread’ is an estimation of what will occur in a particular market for any given event.
Let’s use football as an example: The spread on Total Goals could be 2.8 – 3.0. Thus, if you feel that the outcome may exceed this range – BUY goals! Similarly, should you assume that it would finish lower than mentioned above – SELL goals.
When it comes to sports spread betting, the rewards for getting it right are high. However, making an incorrect call can be costly and result in multiples of your stake being lost!
The key to successful spread betting is to be aware of the market, understand the spread and take into account the form of each team. This can ensure that you stay on top of your game and make informed decisions when it comes to placing a bet.
WHAT CAN I BET ON?
Football spreads can range from popular markets like Goal Lines and Season Points Totals to more obscure markets like Player Performance and Total Corners.
WHAT ARE THE RISKS?
Before participating in spread betting, it is important to remember that you can potentially lose more than your original wager. Therefore, here are some key points to consider.
When compared to other spread markets, Total Goal Minutes in a football match is volatile and unpredictable. Therefore, it may be more difficult to predict the outcome with accuracy, and you could end up in the red. However, the market for Total Goals typically has a more predictable range.
In a football match, if the total goals spread is between 2.8 and 3 and you bet that there will be more than 3 goals, then you might lose 3 times your stake if the game ends in a 0-0 draw. If the total goal minutes spread is between 140 to 150, and you bet that there will be more than 150 minutes of goals, then you could lose 150 times your stake if the game ends in a 0-0 draw.
It is important to remember to set sensible stop-loss levels.
PAPER TRADE FIRST
If you are new to spread betting, it is important to become familiar with the market before laying down real money. This can be done through ‘paper trading’, which involves setting up hypothetical positions without risking any capital.
In essence, paper trading allows you to practice in a simulated environment and gain exposure to the markets without risking real money.
SUMMARY
This form of betting requires more research and understanding than traditional sports betting, but can be more rewarding if done correctly.
When participating in spread betting, it is important to set sensible stop-loss levels and paper trade first. Additionally, it is important to be aware of the market and understand the spread before placing a bet. With a bit of knowledge and research, you can give yourself an edge when it comes to spread betting.
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